hansen.1992-a multidimensional scale for measuring business ethics

A Multidimensional Scale for Measuring Business Ethics: A Purification and Refinement Randall & Hansen

ABSTRACT. Many researchers ill the field of business ethics have attempted to devdop methods to determine and evaluate the ethics of a variety of different classes of people, including students, professionals, and mixed samples of students and professionals. Unfortunately, most of these studies were disjunctive, simply adding confusion to an already unfocused area of research. However, Reidenbach and Robin (1988, 1990), have changed this trend by attempt- ing to quantify the various ethical philosophies into a muki- dimensional scale of business ethics. This paper examines the background of the Reidenbach and Robin (1988, 1990) scale -- including the authors' findings, empirically tests the scale, and concludes that the scale needs further refinement. A promising result is a model with four dimensions: a broad- based ethical judgment dimension, a deontological judgment dimension, a teleological judgment dimension, and a social contract dimension.

Introduction

How does a manager know how to make decisions when faced with ethical dilemmas? Would the manager make a "gut" decision, seek advice from peers, use a rule of thumb, or some combination of all three?

The business ethics field has published many books and articles on the different types of ethical decision-making philosophies used by managers. Reidenbach and Robin (1988, 1990) were one of the

Randall X Hamen is A~D at Florida State University, where his major is marketing and his support area is strategic management. His research interests are directed toward the applied areas of managerial and consumer ethical decision-making as well as strategic issues in social responsibili~. He has published in the Proceedings of the Academy of Marketing Science, Pro- ceedings of the Southern Marketing Association, and Proceedings of the Southern Management Association.

first researchers to attempt to quantify the various ethical philosophies into a multidimensional sca!e of business ethics. The purpose of this paper is to review these ethical philosophies, examine the results of Reidenbach and Robin's (1988, 1990) work, empirically test their multidimensional scale, and then report on the findings of the current study.

The field of business ethics has matured enough as a discipline to begin moving away from pure theory or conceptual articles, and begin testing and refining some of these theories. Reidenbach and Robin's (1988, 1990)work is to be commended for its empirical foundation of developing a multidimensional scale; however, the authors themselves state that the findings from their most recent study do not correspond to normative ethical philosophies. The purpose of this study is to further the findings of Reidenbach and Robin by refining the scale they developed and attempt to add more insight into how managers make ethical decisions.

Ethical dec is ion-making phi losophy

Over the years, researchers have developed several categories of ethical philosophies, many of which posit conflicting ideas, rules, and interpretations which in turn, can lead to conflicting evaluations of what is ethical or unethical, moral or immoral, just or unjust. Most managers (whether they are aware of it or not), over the years develop heuristics, or rules of thumb, for dealing with managerial issues and dilemmas (Ferrell and Gresham, 1985), and these heuristics fall into one of five philosophies. While most marketing researchers limit their discussion to two - deontology and uti l itarianism- this paper will examine all five, which includes relativism, egoism, and justice.

JournaIofBusinessEtkics 11: 523-534, I992. 1992 KtuwerAcademic Publishers. Printed in the Netherlands.

524 Randall S. Hansen

Deontology maintains that the concept of duty is independent of the concept of good, and that actions are not justified by the consequences of the actions, but insist on the importance of the motives and character of the agent rather than the consequences actually produced by the agent (Beauchamp and Bowie, 1983). This branch of philosophy focuses on universal statements of right and wrong; however, where exceptions exist, philosophers have suggested that prima facie universals allow these exceptions in certain situations (Robin et al., 1989). The principle is always to act so that everyone, faced with the same situation, should take the same actions.

Utilitarianism - one of two teleological theories of ethics - is concerned with the consequences of actions and is rooted in the thesis that an action is right if it leads to the greatest good for the greatest number or to the least possible balance of bad consequences (Beauchamp and Bowie, 1983). Utilitari- anism forces the decision-maker to consider all of the outcomes of an action or inaction and to weigh one against another to determine that which is best for society (Reidenbach and Robin, 1990). Just as deontology has its weakness in explaining away exceptions to universal truths, utilitarianistic reason- ing has its weaknesses in determining how one ever knows what is, in fact, the greatest good for the greatest number. Specifically, this theory ignores actions that are wrong in themselves - as tong as the ends justify, the means (Tsalikis and Fritzsche, 1989); the quantification of goodness (Reidenbach and Robin, 1989); as well as how to balance the potential conflict between the principle of utility with that of justice (Tsalikis and Fritzsche, 1989). Still, with its tradition in economics with Adam Smith - who believed that through an "invisible hand" businesses operating in their own sdf interest would produce the greatest economic good for society - utilitarianism has been readily accepted by business (Fritzsche and Becket, 1984; Reidenbach and Robin, 1988).

Egoism, like utilitarianism, belongs in the camp of teleological ethical theories, with the main difference between the two philosophies on the subject of the decision. While utilitarianism focuses on society's long-term interests, egoism focuses on the individual's long-term interests (Reidenbach and Robin, 1990). Philosophers of egoism contend that acting against one's own interest is actually contrary to

reason. Further, ethical egoism supporters view con- ventional morality as tinged with irrational senti- ment and indefensible constraints on the individual (Beauchamp and Bowie, 1983). Ethical egoism is most often attacked on the basis that it ignores what most people would agree are blatant wrongs (Rei- denbach and Robin, 1990). Egoism also has no way of solving conflicts of egoistic interests, and therefore does not satisfy the goals of ethical philosophy - that of the development and maintenance of condi- tions that allow people in a society to pursue a stable and happy life (Reidenbach and Robin, 1990).

Relativism maintains that decisions concerning what is ethical are a function of a culture or individual, and therefore, no universal rules exist that apply to everyone (Reidenbach and Robin, 1990). Relativists believe that moral views are simply based on how one feels or how a culture accommodates the desires of its peoples, not on some deeper set of objectively justifiable principles (Beauchamp and Bowie, 1983). From a relativistic perspective, a moral standard is simply an historical product sanctioned by custom (Beauchamp and Bowie, 1983). One of the biggest weaknesses of relativism is the suggestion that - deep down - there is no real difference between moral beliefs; that if researchers delved far enough into the decision-making processes, the researchers would reach a point where the basic rationales were the same (Reidenbach and Robin, 1990). Further, just as with egoism, there is no way to resolve conflicts between individuals, and thus does not satisfy the goals of ethical philosophy (Reidenbach and Robin, 1990).

Justice, developed from the writings of Aristotle, can be distilled into two ideas - one of fairness and one of just deserves. "A person has been treatedjustly when he or she has been given what is due or owed, what he or she deserves or can legitimately claim. What is deserved may, however, be either a benefit or a burden" (Beauchamp and Bowie, 1983, p. 40). There are two components of justice: distributive justice and procedural justice. Distributive justice refers to the proper distribution of social benefits and burdens and includes six principles: (1) to each person an equal share; (2) to each person according to individual need; (3) to each person according to that person's rights; (4) to each person according to individual effort; (5) to each person according to societal contribution; and (6) to each person accord-

Multidimensional Scale for Business Ethics 525

ing to merit (Beauchamp and Bowie, 1983). Proce- dural justice, on the other hand, deals with developing rules or procedures that result in fair or just outcomes. There are three forms of procedural justice - depending upon the outcomes - including: pure, perfect, and imperfect (Reidenbach and Robin, 1990).

A summary description of each of the five ethical philosophies can be found in Table I.

TABLE I Descriptions of the five ethical philosophies

Deontology Focuses on universal principles of right and wrong. Argues that people accept concept of duty that is independent of the concept of good and that a person's actions are not justified by the consequences associated with these actions, but rather, on the motives underlying these actions, as well as the morals and character of the agent rather than the consequences actually produced by the actor.

Utilitarianism Is most concerned vdth the consequences of actions. Rooted in the proposition that an action is right if it leads to the greatest good for the greatest number or, conversely, to the best balance of bad consequences.

Egoism An act is ethical when it promotes the individual's best long-term interests. If an action produces a greater ratio of good to evil for the individual in the long-run than any other alternative, then the action is ethical.

Relativism Believes that what is ethical is determined by culture or the individual and therefore there are no universal principles or ethical rules that can be applied to everyone. Thus the major implication is that all moral norms are relative to particular cultures.

Justice The ethics of an act is determined by the notion that equals ought to be treated equally and unequals ought to be treated unequally - with an emphasis on fairness. Includes the idea of distributive justice, which looks at how fairly things are distributed - and procedural justice, which develops rules or procedures that result in fair or just outcomes.

The development of a multi-dimensional scale

Reidenbach and Robin (1988, 1990) have taken great steps to develop a multidimensional scale for evaluating how managers make ethical decisions. Reiden- bach and Robin's (1988) first study involved examining the relative concepts associated with each of the five different strains of moral philosophy and testing hypotheses about the way people make ethical decisions. Reidenbach and Robin's (t990) second study attempted to distill the original ethical inventory into a refined multidimensional ethics scale.

Based on previous research (Dubinsky and Rude- lius, I980) that showed that student versus profes- sional evaluations showed a high degree of congru- ence, Reidenbach and Robin (1988) used a sample of 218 basic marketing students at the University of Mississippi. The authors used three scenarios taken from the research of Dornoff and Tankersley (1975) involving ethical issues situated within a retailing context. For each scenario, respondents were asked to rate the action of the individual on each of the 29 scales developed from the five moral philosophies. A bipolar 7-point scale was used, where opposite concepts anchored the scale - such as just/unjust, fair/ unfair. Table II is a listing of the bipolar dimensions used in Reidenbach and Robin's (1988) scale.

The result of Reidenbach and Robin's (I988) first study was a five-factor solution that beared little resemblance to the a priori judgment of moral philosophy. Thus, the authors conclude that individuals do not use a single moral philosophy as a criteria in evaluating the ethical content of marketing activities (Reidenbach and Robin, 1988). The authors also found that individuals rely on similar patterns of criteria in evaluating the different ethical scenarios.

In Reidenbach and Robin's (t990) second study, there was a more explicit intent to develop a multidimensional ethics scale. In this study, the authors started with their original 29-item scale covering the five moral philosophies. The authors treated their earlier study as a pretest to their second study, and by doing so were able to eliminate four scale items. The authors then went through several iterations of small studies, distilling the original scale first to a 14-item scale and then to an 8-item scale. A final study of the 8-item scale was conducted vdth a

526 Randall X Hansen

TABLE II Reidenbach and Robin (1988) 29-item philosophy scale

Justice Scales Just/Unjust Fair/Unfair Results/Does not result in equal distribution of good and

bad

Relativist Scales Culturally acceptable/Unacceptable Individually acceptable/Unacceptable Acceptable~Unacceptable to people I most admire Traditionally acceptable/Unacceptable Acceptable/Unacceptable to my family

Egoism Scales Self promoting/Not self promoting Selfish/Not selfish Self sacrificing/Not self sacrificing Prudent/Not prudent Under no moral obligation to act otherwise/Morally

obligated to act otherwise Personally satisfying/Not personally satisfying In the best interests of the company/Not in best interests

of company

Utilitarianism Scales Efficient/Ineffident Okay if action is jnsffied by results/Not okay of action is

justified by results Compromises/Does not compromise an important rule

by which I live On balance, tends to be good~ad Produces the greatest/Least utility Maximizes/Minimizes benefits while minimizes/maxi-

mizes harm Leads to the greatest/Least good for the greatest number Results in positive/Negatve cost-benefit ratio Maximizes/Minimizes pleasure

Deontology Scales Violates/Does not violate an unwritten contract Violates/Does not violate my ideas of fairness Morally right/Not morally right Obligated/Not obligated to act this way" Violates/Does not violate an unspoken promise

Reidenbach and Robin's (1990) results, as can be seen in Table III, produce three dimensions: a broad- based ethical judgment dimension, a relativistic dimension, and a contractual dimension. The broad- based ethical judgment dimension comprised four items: fair/unfair, just/unjust, acceptable/unacceptable to my family, and morally/nor morally right. The relativistic dimension is comprised of two items: traditionally acceptable~unacceptable and culturally acceptable/unacceptable. The social contract dimension is also comprised of two items: violates/does not violate an unspoken promise and violates/does not violate an unwritten contract.

Reidenbach and Robin (1990) conclude, "the three positive dimensions do not correspond strictly to the normative moral philosophies and tend to dis- agree with several of the hypothesized relationships in recently developed models of ethical decision- making" (p. 649). It is because of the inconsistencies of the results with normative moral philosophies that the current study was developed.

The current study

Overview

The usefulness of the 8-item scale that resulted from Reidenbach and Robin's (1990) most recent study as a measure of a person's ethical decision-making philosophy is questioned in the current study. In fact, this study utilizes Reidenbach and Robin's

TABLE III Reidenbach and Robin (1990) final 3-factor solution

Factor 1: Broad-based moral equity dimension Fair/Unfair Just/Unjust Morally right/Not morally right Acceptable/Unacceptable to my family

Factor 2: Relativistic dimension Traditionally acceptable/Unacceptable Culturally acceptable/Unacceptable

sample of 218 managers from a business association. The authors computed a principal components factors analysis utilizing a varimax rotation that resulted in a natural three-factor solution.

Factor 3: Contractualism dimension Violates/Does not violate an unspoken promise Violates/Does not violate an unwritten contract

Multidimensional &ale for Business Ethics 527

(1988) original scale as a starting point in the analysis of a multidimensional scale of ethical decision- making.

Participants

The research in this article is based on data gathered from questionnaires collected from a convenience sample of 128 students attending marketing classes at a large southeastern university in the Spring of 1991.

Many of the students had previously been exposed to a chapter on marketing ethics, but no unusual amount of time was spent either discussing ethics nor the intent of the present study.

Procedure

The respondents were asked to read three different business scenarios containing some marketing di- lemma - see Table IV - and then rate the action of the manager on each of the 33-item bipolar scales. These responses to the three scenarios were then subjected to a confirmatory maximum likelihood factor analysis, with the a priori hypothesis of a five factor solution (based on the five ethical philosophies).

Stewart (1981) defines factor analysis as a statistical technique that identifies a structure within a set of observed variables. Factor analysis establishes dimensions within the data and serves as a data reduction technique (Stewart, 1981). One of the functions of factor analysis is to test an a priori hypothesis about the number of dimensions or factors underlying a set of data (Stewart, 1981) - as was done in the first part of the current project.

While in at least one of the Reidenbach and Robin (1990) factor analyses the authors chose to use principal components, maximum likelihood was chosen in the current research project. According to Johnson and Wichern (1988), the cumulative proportion of total sample variance explained by the factor solution is larger for principal components than for maximum likelihood. This difference is because the loadings are related to principal components which have, by design, a variance optimiz- ing property (Johnson and Wichern, 1988). Stewart

TABLE IV Research scenarios

Scenario # 1 Dave Smith is developing an advertisement for a new housing development his firm is about to start. The development is located in a low area which has flooded in the past. The company has recently done some work to reduce the danger of flooding in tile future. In the preliminary advertisement, Smith has included a state- ment indicating that the firm has solved the flooding problem. The fact is that if a flood occurs, the homes are still likely to have up to a foot of water standing in the yards.

Scenario # 2 John Ward is manager of product development for an auto parts contractor. Ward's firm received a large contract last summer to manufacture transaxles for use in a new line of front-wheel-drive cars. The contract is very important to Ward's firm because prior to obtaining it, half of the firm's employees, including many in Ward's department, had been scheduled for an indefinite layoff. Final testing of the assemblies ended last Friday, and the first shipments are scheduled for three weeks from today. As Ward was examining the test reports, he discovered that the transaxle tended to fail when loaded at more than 120% of rated capacity and subjected to strong torsion forces. Ward notifies his supervisors, but they seem uninterested. Ward thinks about notifying the company that is purchasing the transaxles, but decides against it so the company does not lose the contract.

Scenario # 3 Brantwood Corp. operates a plant that conforms fully to local requirements for maximum emission of toxic sub- stances, as established 10 years ago. The facility is inspected annually and toxic emissions have always been and remain well below the acceptable level. Relying on recently published research, one of the company's quality control inspectors, Jim Kaats, argues that the cumulative effects of the low level of pollution from the plant entail a possible risk to public health. Kaats says that public officials would agree if they had known of these studies when the original figures were set. Changing the manu- facturing process would be costly. It would require substantial layoffs and the plant is the largest single employer in town. Kaats decides not to release his findings.

(1981) adds that principal components, while pro- viding inflated loadings in comparison with other


procedures, does yield similar results. The overall objective of maximum likelihood is to find the factor solution that best fits the observed correlations (Kim and Mueller, 1978).

For all three scenarios, the 5-factor model produced a high chi-square that resulted in a probability of 0.0001, and thus the null hypothesis that five factors is sufficient was rejected. For this type of analysis, for the null hypothesis not to be rejected, the probability must be greater than 0.0005. Because of the rejection of the a priori hypothesis that the data would fit a five-factor solution, the next step, according to Kim and Mueller (1978), was to in- crease the number of factors until a factor solution was found that had a chi-square and probability that supported the null hypothesis. The results of this process, as seen in Table V, show that scenario number 1 has a 7 factor solution while scenarios 2 and 3 have an 8 factor solution. The problem associated with relying on the chi-square significance test, however, is that the end result is a factor model with more common factors than is desirable (Kim and Mueller, 1978).

The next step, according to Kim and Mueller

(1978) is finding simpler and more easily interpretable factors. Thus the data were then examined to look for variables that could be eliminated from the analysis - per one of the three general functions of factor analysis as outlined by Stewart (1981). This process, which examined both factor loadings and reliability coefficients, resulted in the elimination of variables having both low factor loadings and low reliability ratings, including 1, 8, 9, 14, 15, 16, 17, 20, 25, 26, 29, and 30.

The reduced model with the remaining 18 variables was tested using maximum likelihood confirmatory factor analysis, again using the a priori hypothesis of 5 factor solution. The 5 factor reduced model produced a chi-square such that we failed to reject the null hypothesis of a 5 factor solution. The results of this analysis, on all three scenarios, can be seen in Table VI.

After having found the right number of factors, according to Kim and Mueller (1978), the next step is to rotate the axes to get a simpler and/or more easily interpretable solution. Varimax, a method of orthogonal rotation which simplifies the factor structure by maximizing the variance of a column of

TABLE V Full model maximum likelihood factor analysis findings

Scenario

Number of Number of Prob. > Factors Iterations Chi-Square Chi-Square

Number 1

Number 2

Number 3

12 491.087 0.0001 9 419.027 0.0001

18 360.492 0.0002 11 311.094 0.0031 21 265.769 0.0262

4 12 516.556 0.0001 5 9 440.291 0.0001 6 11 386.304 0.0001 7 13 328.425 0.0003 8 12 283.569 0.0037

4 9 535.606 0.0001 5 11 457.140 0.0001 6 23 404.497 0.0001 7 15 344.053 0.0001 8 17 291.375 0.0014

Multidimensional Scale for Business Ethics

TABLE VI Reduced model maximum likelihood factor analysis findings

529

Scenario Number of Number of Prob. > Factors Iterations Chi-Square Chi-Square

Number 1 4 7 139.627 0.0003 5 14 109.364 0.0038

Number 2 4 8 150.997 0.0001 5 10 t 12.385 0.0021

Number 3 4 10 143,878 0,0001 5 7 90.819 0,0773

the pattern matrix (Kim and Mueller, 1978), was used. Varimax rotation has been shown to be among the best orthogonal rotation procedures (Dielman et al., 1972; gorsuch, 1974). Stewart (1981), however, states that the rotation employed tends to have relatively little impact on the interpretation of the results.

While interpretation of the factors was a key element in rotating the solution, the use of varimax was used in an attempt to meet Thurstone's (1942) five criteria for evaluating a solution for simple structure. Whurstone (1942) suggests that: (1) each row of the reference-structure matrix should have at least one zero; (2) for each column of the reference- structure matrix, there should be a set of at least one linearly independent observed variables equal to at least the number of common factors whose correlations with kth reference-axis variable are one; (3) for every pair of columns of the reference-structure matrix, there should be several zero entries in one column corresponding to nonzero entries in the other; (4) when four or more common factors are obtained, each pair of columns of the reference- structure matrix should have a proportion of corresponding zero entries; and (5) for every pair of columns of the reference-structure matrix there should be only a small number of corresponding entries in both columns that do not vanish.

The results of the maximum likelihood confirmatory factor analysis with five factors and varimax rotation can be seen in Table VII. Across all three scenarios, a pattern emerges on what variables load with what factors.

The interpretation of the factors in the reduced model can be found in Table VIII. Factor 1, a broad- based ethical judgment dimension, includes eight variables: just/unjust; on balance, tends to be good/ bad; individually acceptable/unacceptable; okay/not okay if action is justified by results; cuIturalty acceptable/unacceptable; acceptable/unacceptable to people I most admire; morally right/not morally right; and acceptable/not acceptable to my family. Factor 2, deontological judgment, includes two variables: he/she is obligated/not obligated to act this way and he/she is/not duty bound to act this way. Factor 3, social contract judgment, includes two variables: violates/does not violate an unwritten contract and violates/does not violate an unspoken promise. Factor 4, teleologicaljudgment - including elements of egoism and utilitarianism, includes four variables: results in positive/negative cost-benefit ratio; produces the greatest/least utility; is/not in the best interest of the company; and efficient/inefficient. The fifth factor is uninterpretable.

The final step involves examining the reliability of the scale items in each factor. Coefficient alpha was derived, because although some aspects of deriv- ing alpha have been criticized (Bender, 1972; Tyron, 1957), Peter (1979) states that it is the most useful formula for assessing the reliability of measures in marketing research. Nunnally (1978) suggests that for basic research alpha should be at least 0.7, but preferably 0.8 or better. Table IX shoves that for the most part, the reliabilities for the four interpretable factors are high and consistent across the three ethical scenarios. Factor 1 has the highest reliability


TABLE VII

Factor loadings on reduced model - max imum likelihood with varimax rotation

Scenario

Variable Factor 1 Factor 2 Factor 3 Factor 4 Factor 5

Number Loading Loading Loading Loading Loading

Number 1

Number 2

Number 3

2 0.726 0.064 --0.137 0.330 0.038

3 0.752 0.462 --0.182 0.340 0.134

4 0.740 0.066 --0.207 0.187 0.255

5 0.403 --0.130 --0.001 0.248 0.356

6 0.740 0.002 --0.228 0.118 0.151

7 0.841 --0.004 --0.094 --0.054 0.200

10 0.086 0.697 --0.009 0.163 0.131

11 0.008 0.992 --0.111 --0.013 0.063

12 0.686 0.086 --0.263 0.216 0.129

13 0.781 0.185 --0.127 0.132 0.035

18 0.114 0.019 --0.087 0.540 0.027

19 0.240 0.074 0.010 0.535 0.057

21 0.314 --0.021 --0.290 0.151 0.491

22 0.053 0.231 --0.220 0.430 0.382

23 0.294 0.114 --0.343 0.384 0.362

24 0.119 0.201 0.100 --0.005 0.672

27 --0.360 --0.108 0.518 --0.135 --0.092

28 --0.256 --0.029 0.888 --0.062 0.030

2 0.665 0.045 --0.079 0.188 0.286

3 0.581 0.183 --0.121 0.167 0.766

4 0.673 0.247 --0.194 0.101 0.196

5 0.477 0.101 --0.213 0.260 0.096

6 0.623 0.036 --0.046 0.177 0.031

7 0.690 0.167 0.200 0.201 --0.032

10 0.309 0.941 --0.009 0.139 0.006

11 0.135 0.646 0.035 0.200 0.080

12 0.774 0.275 0.035 0.091 0.107

13 0.632 0.166 --0.168 0.181 0.038

18 0.073 0.087 --0.057 0.937 0.117

19 0.169 0.239 0.022 0.718 0.069

21 0.405 0.250 --0.247 0.416 --0.071

22 0.215 0.026 --0.092 0.488 0.072

23 0.482 0.105 0.242 0.364 0.067

24 0.304 0.137 0.073 0.442 --0.217

27 --0.296 --0.012 0.831 --0.010 --0.118

28 --0.222 0.057 0.969 --0.097 0.008

2 0.860 0.002 --0.136 0.267 --0.059

3 0.856 0.037 --0.049 0.272 0.091

4 0.777 0.084 --0.133 0.324 0.060

5 0.666 0.107 --0.047 0.341 --0.057

6 0.701 0.068 --0.039 0.177 0.215 7 0.681 0.094 0.213 0.172 0.672

Multidimensional &ale for Business Ethics 531

Table VII (Continued)

Scenario Variable Factor 1 Factor 2 Factor 3 Factor 4 Factor 5 Number Loading Loading Loading Loading Loading

10 ti I2 !3 18 !9 21 22 23 24 27 28

0.096 0,726 --0.118 0.195 0.054 0. t02 0.971 --0.015 0.218 -0.004 0.691 0.189 --0.179 0.186 0.084 0.713 0.053 0.198 0.164 0.396 0. t 82 0.131 0.094 0,686 0.066 0.326 0,176 --0.001 0,630 0.088 0,522 0,084 0.128 0,334 0.124 0.303 0.106 0,044 0.714 0.049 0.296 0.187 --0.107 0,663 --0.009 0.481 0, I 30 --0.140 0,377 0.025

--0.201 --0.080 0.863 -0.139 --0.049 --0.144 --0.068 0.984 -0,047 0.068

Factor I

Factor 2

Factor 3

Factor 4

TM3LE VIII Factor interpretations on reduced model

Broad-based EthicaI]udgment

Just/Unjust On balance, tends to be good/Bad Individually acceptable/Unacceptable Okay/Not okay if action is justified by results Culturally acceptable/Unacceptable Acceptable/Unacceptable to people I most admire Morally right/Not morally right Acceptable/Not acceptable to my family

DeontotogicatJudgment

He/she obligated/Not obligated to act this way He/she is/Not duty bound to act this way

Social Contract Judgment

Violates/Does not violate an unwritten contract Violates/Does not violate an unspoken promise

r a @ment (combining Egoism and Ufilitarianism )

Results in positive/Negative cost-benefit ratio Produces the greatest/Least utility Is/Not in the best interest of the company Efficient/Inefficient

TABLE IX Reliabilities off'actors

Alpha Standardized Alpha

Factor 1 (Variables 2, 3, 4, 5, 6, 7, 12, 13)

Scenario 1 Scenario 2 Scenario 3

Factor 2 (Variables 10, I1)


Factor 3 (Variables 27, 28)


Factor 4 (Variables 18, i9, 22, 23)


0,91!1 0.9168 0,8904 0.8946 0.9350 0.9370

0.8380 0.8383 0.8062 0.8066 0.8650 0.8650

0,7025 0.7026 0.9283 0.9283 0.9433 0.9433

0.6657 0.6698 0.7632 0.7678 0.8238 0,8243


scores, while Factor 4 has a slightly undesirable score for the first scenario, but higher reliability scores in the second and third scenarios - leading to an examination of the first scenario before being used in further research.

Discussion

The results of the confirmatory factor analysis pro- vide four interpretable factors: a broad-based ethical judgment dimension, a deontological judgment dimension, a social contract judgment dimension, and a teleological judgment dimension. These results are similar, but strikingly different than Reidenbach and Robin's (1990) results.

Murphy and Laczniak (1981) have pointed out that almost all normative ethical theories in moral philosophy can be classified as either deontological or teleological. The fundamental difference between the two is that deontological theories focus on the actions or behaviors of an individual, whereas teleo-

logical theories focus on the consequences (Hunt and Vitell, 1986).

Hunt and Vitell (1986) suggest, in their general theory of marketing ethics - that is reproduced in Figure 1, that once an individual confronts a problem perceived as having ethical content he or she will perceive various possible alternatives or actions that might be followed to resolve the ethical problem. The authors suggest that individuals do not recognize the complete set of alternatives, and although Hunt and Vitell (1986) do not speculate on the reasons, one suggestion might be that the individual uses some sort of broad-based ethical judgment as a screening device. Hunt and Vitell (1986) suggest that once the individual perceives a set of alternafves, that two kinds of evaluations taken place - a deontological evaluation and a teleological evaluation. In the deontological evaluation the individual evaluates the inherent rightness or wrongness of the behaviors implied by each alternative, while in the teleological evaluation the individual evaluates the consequences of the various behaviors. The

Cultural Environm~rlt

Industry Environment ~"

T

_ Perceived Ethical Problem t

A},ternatives t

1 Conmquon~ I

De, ontolog i~1 Norms

Com=querme=

Dmr=b.~ of Cons~lUer~==

M~i~o, t . .= . of ~'t StakL~olden

Evllustion I

I E~i==l I .... Jud~r~ I

Teleological } Ev=lustion

$ituationl( ~n straln~ ]

Fig. 1. Hunt and Vitell's (1986) general theo D, of marketing ethics.

Multidimensional Scale for Business Etkics 533

factor solution from the current research suggests that there is a third kind of evaluation - a social contract evaluation. In the social contract evaluation the individual evaluates whether any of the alternatives would violate an unwritten contract or unspoken promise, which makes intuitive sense because of the emphasis placed on business lave and contracts in most business schools.

While Reidenbach and Robin (1990) have done a thorough job in analyzing the results from their research, the authors do not spend any time trying to link the results of their reduced multidimensional ethics scale to any ethical theory. While there is some consistency between the results from Reiden- bach and Robin (1990) and the current study - the idea of a broad-based ethical judgment construct and a social contract construct - Reidenbach and Robin (1990) suggest that there should be a third relativist construct, while this research suggests that there should be two other constructs - deontological judgment and teleological judgment. While there are still concerns, the current research seems to have a better fit with a general theory of marketing ethics.

Limitations and future research

What seems clear from this stream of research is that further work needs to be done. While the current research seems to fit with published theory on ethical decision-making, there are three main limitations to this project.

The first problem is that while the confirmatory factor analysis fit a 5 factor model, only four of the factors were universally interpretable among the three scenarios. A further refinement of the scale needs to be done to clarify the solution.

The second problem is that two of the factors are measured with only two variables. Rather than just scale reduction, an effort should be made to produce new variables that might measure the same factors.

The third problem is a weakness with one of the measures that load on the broad-based ethical judgment dimension. The fifth variable - okay/not okay if action is justified by the results - either needs to be refined or thrown out even though the variable has a high factor loading and coefficient alpha is 0.9

across the three scenarios because it represents teleological judgment.

As mentioned earlier in the paper, future "work in business ethics needs to continue empirically testing previously published theories. Some areas that should be addressed include:

(1) Are business students the best participants to use, or should all future research include mixed samples of managers and students?

(2) Do managers at different levels within the organization use different ethical philosophies or have different ethical decision-making techniques?

(3) Are certain companies within certain indus- tries more likely to have ethical managers than others?

(4) What role does the notion of ethical opportunity (Hansen and Ford, 1991) play in influ- encing the ethical decision-making of managers?

(5) What does the model of ethical managerial decision-making look like? There are about 13 models in the extant business literature - with very Iittle consensus among them, and very little empirical work completed.

Conclusion

The question of the process individuals use irt evaluating ethical situations and in choosing a solution is a hotly researched area in marketing. The purpose of this research was an attempt to further develop a scale developed by Reidertbach and Robin (1988) that could distinguish the processes individuals use in evaluating ethical situations and choosing solu- tions.

While further research needs to be done, the results clearly show that individuals use four evaluation dimensions when making decisions with ethical implications: a broad-based ethical judgment evaluation, a deontological judgment evaluation, a teleological judgment evaluation, and a social contract evaluation. These results fit fairly well with a general theory of marketing ethics developed by Hunt and Vitell (1986), but further research needs to be conducted to improve the scale and the interpretation of the findings.


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